Tesla (NASDAQ:TSLA) stock has risen considerably since June 2019. With the upward spree in the stock, a few bears have held their stance, while a few others have turned into bulls. Jim Cramer, the host of CNBC’s Mad Money, had turned bullish on Tesla stock about 150 points ago. On Tuesday, the stock closed at a record high level of $469.
Jim Cramer is bullish on Tesla stock
According to a CNBC report, Cramer is “dumbfounded” that Tesla stock hasn’t risen to a level where “it could be double that of the traditional automakers.”
The rise in the stock has expanded Tesla’s market capitalization to a size that is almost the sum of General Motors (NYSE:GM) and Ford Motor’s (NYSE:F) market caps. Tesla’s market cap has widened to approximately $85 billion. In comparison, General Motors and Ford’s market caps are around $50 billion and $37 billion, respectively.
Cramer seems to be impressed with Tesla’s growth story. According to the report, he said, “Because the stock market loves growth and this market, in particular, can’t get enough of it.” He also said, “Tesla has growth in spades; of course investors will pay up for it. GM has barely any growth. Ford’s actually shrinking. Nobody wants to pay up for stagnation.”
Why is Cramer bullish on the stock?
Cramer said that EVs (electric vehicles) are the future of the auto industry. While General Motors and Ford are still working on their EV market penetration, Tesla is already leading the race. He said that Tesla’s business is growing in China, while General Motors and Ford are struggling. General Motors’ sales in China fell by 15% in 2019. Ford is already revamping its business in China to make it profitable.
In contrast, Tesla has gone big in China with Gigafactory 3. The company built the factory in record time and at a much lower cost than its US counterparts. On Tuesday, the stock touched an all-time high when Gigafactory 3 started to deliver its China-made Model 3.
After rising by 74% in the fourth quarter of 2019, Tesla stock had a fantastic start to the year. The stock has risen by 12% year-to-date. The rise is due to record deliveries and the commencement of Model 3 deliveries from Gigafactory 3.
Tesla’s record deliveries
In the fourth quarter, Tesla posted deliveries of 112,000 units—higher than its guidance and analysts’ estimate.
Tesla expected to beat the lower end of its yearly guidance range, which was 360,000–400,000 units. To do that, the company would require deliveries of 104,440 units in the fourth quarter. However, Tesla exceeded this number.
The company’s deliveries were also higher than analysts’ estimates of 106,000 units. So, Tesla’s yearly deliveries touched 367,500 units in 2019, which reflected about a 50% YoY growth.
Output from Gigafactory
As a direct answer to Tesla’s critics, CEO Elon Musk built the Gigafactory 3 in one year and started production at the site. Most Tesla bears doubted the company’s ability to start production so soon. They expected the company to face glitches like it did in the past.
However, Tesla proved the critics wrong with a smooth startup. The company rapidly increased production at the site from mere trial runs to about 1,000 units per week. Soon, the company is expected to increase production to 3,000 units per week. The Model 3 deliveries from the factory for the general public started on Tuesday. Musk also plans to start producing Model Y at the site.
Musk mapped out Tesla’s growth trajectory, which is driving up the stock. The rise in the stock has strengthened the bulls and weakened the bears. Notably, the rise has also led to considerable losses for short-sellers. To learn more, read Tesla Stock Rise Burns Einhorn’s Greenlight Capital.